For recent retirees, financial readiness was far from the most important factor in their decision to step off the hamster wheel.
Ameriprise Financial surveyed 1,000 newly retired baby boomers between the ages of 60 and 73 years old with at least $100,000 in investable assets. Half the group had spent their careers in the public sector, while the other half came from the private sector.
Nearly all these boomers, or 94 percent, said it was important for them to feel financially confident before they decided to retire. However, when asked what exactly prompted their step into retirement, financial readiness dropped a few notches down the list.
Here are the reasons most chosen by recent retirees as a trigger for retirement, according to the online study that was conducted in the fall:
- It’s time to enjoy life (35 percent)
- Don’t want to work anymore (16 percent)
- Forced out by employer or given early retirement incentive (16 percent)
- Reached my retirement savings goal (12 percent)
The breakdown indicates that the decision to retire is as much an emotional one as it is financial.
“The financial and emotional preparations for retirement need to come together for a successful retirement, but the actual decision itself isn’t necessarily as balanced,” said Marcy Keckler, v.p. of financial advice strategy at Ameriprise Financial in Minneapolis. “A lot of people just want to enjoy themselves.”
As further evidence of the role emotions play in the decision to retire and the aftermath of that decision, there’s another surprising finding: While these baby boomers, who all retired within the last five years, may have felt financially confident when they retired, some are already having second thoughts.
About a third, or 29 percent, say they would have saved more money beforehand, while 22 percent say they’re spending more money in retirement that they thought they would. The fact that an overwhelming majority of these boomer retirees still have a pension – 70 percent in this survey – may also be a key reason they weren’t as worried about having enough savings to retire.
“They don’t have to tap into retirement savings,” Keckler noted. “We definitely expect that share to decline [in future surveys], since we know it’s increasingly less common for employers to offer pensions.”
As traditional pensions slowly disappear or become increasingly underfunded, the list of reasons for retiring and the breakdown within them will certainly change in the years to come. “It will be interesting to watch,” said Keckler.
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